CTL Strategies ranked in Chambers Global Guide 2024
CTL Strategies has been ranked in the Chambers Global Guide 2024, published by Chambers and Partners.
The new edition of the Global Guide highlighted CTL for its considerable market respect in tax matters, and demonstrating strength in litigation and corporate services. Among responses received from interviewees, Chamber and Partners quoted that the firm is “able to handle complex matters and provide unbiased legal advice.”
Chambers and Partners is an independent research firm that operates in 200 jurisdictions and is commonly referred to as the “gold standard” in the legal profession. Chambers and Partners publishes rankings and information on the world’s top lawyers and law firms. In-depth interviews with lawyers, in-house counsel for clients, and independent experts were used to compile the rankings.
Regulation on Foreign Currency
On 1 October 2024, the Regulation on Foreign Currency was published by the Maldives Monetary Authority (MMA) and came into immediate effect, repealing the long-standing Monetary Regulation in operation since 1987.
The Regulation introduces significant new rules over incomes received in foreign currency and overarching new controls over foreign currency transactions. Further, the Regulation also includes provisions that empower the MMA to closely monitor income received in foreign currencies.
This Client Advisory explains the new rules and compliance requirements introduced under the Regulation.
DownloadThe New Foreign Investment Act Ratified
The new Foreign Investment Act (Act Number 11/2024) (the “Act”) was ratified by the President of Maldives on 3 September 2024, introducing new rules to the foreign investment framework in the Maldives.
Upon becoming effective, the Act will repeal the Maldives Foreign Investment Act of 1979 (Act Number 25/79) (the “Previous Act”).
Definition of Foreign Investment
The Act defines “foreign investment” as the transfer of capital, employees or technology to the Maldives by a foreign investor pursuant to a foreign investment licence issued to the investor.
This definition notably excludes projects or works which are engaged for specific contract periods and the Act does not specifically address the procedures relating to such time-bound projects or works.
As such, it is presently unclear how entities can be set up for time-bound projects under the Act – which would have significant impacts on foreign contractors in Maldives. Clarifications are expected to be provided by the Ministry of Economic Development and Trade (the “Ministry”) in due course regarding the business registration process applicable to such projects.
Permitted Sectors for Foreign Investments
Similar to the previous regime, the new Act continues to maintain sector-specific restrictions for foreign investments in the Maldives. To be eligible for setting up a foreign investment in the Maldives under the Act, the targeted business sector of the foreign investment must either be:
The Act outlines the following categories applicable to foreign investments in the Maldives.
The New Act therefore diverges from the current practice wherein foreign investment approvals are granted under an exhaustive industry sector list published by the Ministry in its Foreign Direct Investment Policy.
Restricted Sectors
Restricted sectors and open sectors with conditions/restrictions as noted above will be determined by the Minister of Economic Development and Trade in consultation with the Cabinet. Sectors that do not fall into restricted sectors or open sectors with conditions/restrictions will be open for foreign investment without any restrictions.
The lists are to be published within three months of the Act coming into effect and will be reviewed by the Ministry every three years.
Foreign Investment Approval Process
The Act reiterates the current foreign investment approval process, which remains mostly unchanged. The process consists of the following stages:
Foreign Investment Licence
The main update in the approval process in the new Act is the introduction of the foreign investment licence detailing the investment particulars.
According to the Act, the Foreign Investment Licence must include the approved business sectors for the foreign investment. Where the foreign investor seeks to revise the business sectors, they would be required to submit an application to the Ministry to update the Foreign Investment Licence. This process aligns with the current practices followed by the Ministry.
If the foreign investor wishes to renew the Foreign Investment Licence, a renewal application has to be submitted to the Ministry prior to six months from the expiry of the Licence.
Existing Investments
Upon the Act coming into effect, foreign investments established under approvals granted by the Ministry pursuant to the Previous Act will be deemed as registered foreign investments under the new Act.
However, foreign investments established under approvals granted by the Ministry of Tourism, as well as those established without foreign investment approvals, must submit a new foreign investment application under the Act within 12 months of it coming into effect (i.e. before 3 December 2025). Failure to submit the required application will result in the revocation of business permits issued to such foreign investors.
Who can apply for foreign investment approval?
The below entities/persons are listed under the Act as being eligible to apply for foreign investment approval:
Suspension or Termination of Foreign Investment Licence
A foreign investment licence may be suspended or revoked where:
The Act requires the Ministry to revoke the foreign investment licence in the following instances:
Investor Protections
The following provisions have been provided in the Act with respect to investor protections:
It is to be noted that the above protections are generally covered under the existing Foreign Investment Agreements and the Act codifies these protections.
International Treaties and Free Trade Agreements
The Act further includes provisions for the application of international treaties and free trade agreements (FTA) for foreign investments in Maldives. Where such treaties and FTAs include provisions to govern specific foreign investments in Maldives, the Act prescribes that those provisions would prevail over any other relevant rules.
Effective date
The Act will come into effect on 3 December 2024.